Ethics in the Economy and Business Ethics:

Many definitions

Suggested definition:

Reflection on relations between values (particularly ethical

values) and economic development and economic
efficiency on the macro (national economy) and micro
(corporate and individual) level.

Ethics in the Economy and The Business Ethics can be

treated as a part of general ethics (Philosophy);
Important links with Economics, Business Administration
(Managerial Science), Sociology and Political Science,
Anthropology, Theology and Philosophy of Religion (links
between Business Ethics and Religious Environment).

Ethics in the Economy > Business Ethics

Business Ethics: more corporate oriented discipline
Ethics in the economy: includes also Ethics of the
Institutions (ethical aspects of institutional environment).
Three approaches to Business Ethics
Relations between Ethics and Economics
Business Ethics = normative economics
• Presupposition of the moralisty of the market itself
• Ethics as an ‘lubricant’ for more economic rationality
Functional Business Ethics
Business Ethics = applied ethics
• Presupposition of given circumstances
• Ethics as an antidote against too much economic
rationality
Corrective Business Ethics
Business Ethics = Critique of Economic Reason
• Presupposition of ethical reasoning
• Ethics as a “sound base” for a different socio-
economic rationality
Integrative Business Ethics

Ethical Reason versus Economic Rationality

Economic rationality: normative Ethical reason: normative logic
logic of the exchange of benefit of human interaction

Power-based Justice-based
(what can be asserted is what (what is legitimate is what
counts) counts)

Interest in maximization of inter-subjective obligations

profits and private success

Benefit-oriented conditional unconditional reciprocal respect

cooperation between self- and recognition of persons of
interested, mutually equal dignity
unconcerned individuals

Market principle Moral principle

The Moral Economic Man

The Homo Oeconomicus model:
Agents are exclusively self-interested and want to
maximize their utility function

The relations between utility, ethics and behavior (Etzioni’s

Model): Behavior is co-determined by utility calculations
and moral considerations.

Determinants of the Ethicality of Behavior

Strong moral character

Ethical behavior

Low relative cost of ethical behavior

Weak moral character

Unethical behavior

High relative cost of ethical behavior

Conclusion:
• The more collective belief in the ethical norms by the
economic actors, the less one can expect unethical
behavior from them
• The stronger the pro-social orientation of the
economic actors, the more one can expect ethical
behavior from them
• The greater the social costs of transgression by the
economic actors, the less one can expect unethical
behavior from them
• The greater the transparency and accountability of the
economic actors, the more one can expect ethical
behavior from them
The Ethics of the Market – Institutional Approach (levels of
reflection)
Individual Ethics (micro Personal Ethos (integrity,
level) honesty, trust),
responsibility as citizen,
employee, customer…
Organizational Ethics (micro Corporations and Public Co-
and Meso level) responsibility, CSR, social
partners (trade unions),
interest groups, NGO’s,
common good organizations
(churches, etc.)
Structural Ethics (macro Relations of Society and
level), ‘Ethics of the Economy (Ordnungspolitik),
Institutions’ Framework of the Market
(Constitution), Laws, Social
Foundation of Property

Intellectual (Philosophical) sources of modern Business

Ethics:
• Utilitarianism (A. Smith, J.S. Mill, today: M. Friedman)
– homo oeconomicus concept, concentration on
consequences of human acts – stockholder approach
• Kantian Ethics (I. Kant, today: N. Bowie, E. Freeman) –
role of intentions and motivation, human person as
the end (goal), not tool: stakeholder approach
• Virtues ethics (Aristotle) –concentration on the acting
person
• Religious ethics: Christian (Catholic and Protestant,
Orthodox), other religions.

The role of Regulation and Self-Regulation in Business

Ethics
Regulation: law
Self-Regulation: Codes of Conduct

The Ethical Codes of Conduct

• Codes of Conduct created by companies
(corporations)
• Codes of Conduct prepared by Business Community
(chambers of commerce, sector associations)
• Codes of Conduct created by international
organizations for business: UN (Global Compact),
OECD (OECD Guidelines for Multinational
Companies), European Parliament, ILO (International
Labor Organization), International Chamber of
Commerce.

Stockholder vs. Stakeholder approach.

From business ethics and the ethics in the economy
to Corporate Social Responsibility and
Sustainability. New current: Spirituality of
management.

International Business Ethics:

 • Ethical reflections on Transnational
Corporations and globalization (integration)
• Implications of various cultural/religious
environments and models of corporate
governance on international business
• The most important dilemmas in international
business: relativism vs. absolutism.

Religion and Business Ethics:

• Religions and religious traditions vs. economic
ethos
• Religion as a part of institutional environment
(informal institutions and implications for the
social capital)
• Different opinions about the role of religion
(small influence or strong influence, positive,
neutral or negative)
• Specific anti-religious spirit of Marxism
(historical materialism, dialectic materialism,
historical determinism (laws and necessary
stages of economic development), theory of
socio-economic formations, role of the class
structure, negative role of religion - alienation)
• Teaching about material base and
superstructure, role of the productive forces and
productive relations, ownership of the means of
production

• Max Weber and his concept of the

predestination, rationalism, “spirit of
 capitalism”, work as a vocation, paradox of
asceticism and rich
• Catholicism – Protestantism; Calvinism and
Puritanism
• Max Weber and his opposition against Marxism
and Catholicism
• Strong and weak aspects of Weber’s Theory
• Modern Catholic and John Paul II social
teaching
Ethical aspects of International Business (T.
Donaldson):
• Absolutism
• Relativism (In Rome do as the Romans do)
• Realism

Institutions, Ethics and Economic Development:

Does Ethics Pay?

From the concept of Business Ethics and the Ethics

in the Economy to the CSR, Spirituality of
Management and the Sustainable Development.

• Macroeconomic aspects: development vs.

ethical standards (institutions, social capital,
relations between freedom and solidarity,
development vs. community and
competitiveness)
• Microeconomic aspects: business ethics, CSR.

Sustainable development: 3 aspects:

 • Economic (business)
• Ecological (Natural Environment)
• Social (CSR, social model).

CSR – Corporate Social Responsibility (CR):

Corporation is ethically responsible for the effects of
its activity and as the important social partner.
Stakeholders: stockholders, managers, employees,
customers, suppliers, local community, natural
environment…

Two approaches:
• Milton Friedman (stockholders’ approach): the
social responsibility of business is to gain
profits
• E. Freeman, Norman Bowie… (stakeholders’
approach): the business is obliged to pay
attention to the stakeholders and their needs.